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Tar Heel Corporation had current and accumulated E&P of $500,000 at December 31 year 1. On December 31, the company made a distribution of land

Tar Heel Corporation had current and accumulated E&P of $500,000 at December 31 year 1. On December 31, the company made a distribution of land to its sole shareholder, William Roy. The land's fair market value was $100,000 and its tax and E&P basis to Tar Heel was $25,000. William assumed a mortgage attached to the land of $10,000. The tax consequences of the distribution to William in year 1 would be:


100,000 dividend and a tax basis in the land of $100,000
B)$100,000 dividend and a tax basis in the land of $90,000
C)Dividend of $90,000 and a tax basis in the land of $100,000
D)Dividend of $90,000 and a tax basis in the land of $90,000

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